Winnipeg, Jan. 26 – Diesel prices in North America are unlikely to fall to the levels of gasoline anytime soon, according to an analyst.
“It’s probably going to trade at a premium to gasoline for some time,” said Phil Flynn, energy market analyst for Price Futures Group in Chicago, Illinois.
He said emissions requirements are a key challenge facing diesel makers.
In recent years governments in North America and Europe have mandated the used of ultra-low sulphur diesel.
Since Oct. 1, 2010, all on-road and off-road diesel fuel in Canada, except for rail and marine applications, must be ultra-low sulphur diesel.
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This type of diesel, which is more friendly for the environment, requires heavier processing, costlier oil while also reducing fuel economy by one or two percent.
“When they started to switch to the ultra-low sulphur diesel the hope was that the refiners would get in front of it, prices would come down and it would only add a couple of pennies to the process,” said Flynn.
That didn’t happen, said Flynn. The process has proven to be a much costlier affair and one where more things can go wrong.
“The refiners at this time cannot produce enough of it to keep prices down because the process is a lot more expensive,” said Flynn, adding that the result is tighter supply.
Ultimately, it may not be cheaper gasoline that pushes diesel prices down, but increasing conversions to natural gas.
“Because it will be a lot cheaper than diesel, and it’s cleaner burning,” said Flynn.
According to reports, diesel prices vary across the Prairies with motorists in Calgary paying roughly 73 cents a litre for gas and 94 or 95 cents a litre for diesel.
In Winnipeg, drivers were reportedly paying roughly 83 cents a litre for gas and 103 cents a litre for diesel.
